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McDonald's Real Estate

 

During his outstanding presentation on the December '24 NOA webcast, Attorney Robert Zarco reminded us that McDonald's is essentially a real estate company that sells hamburgers. He made many recommendations that assume McDonald's Owner/Operators thoroughly know the real estate status of each of their restaurants.

Is that the case, or are Owner/Operators just relying on verbal representations from McDonald's corporate employees?

A little history: When Ray Kroc founded McDonald's, the Owner/Operator was usually responsible for providing the land and building.

As the company grew, the corporation provided facilities, and the real estate became a part of the franchise relationship.

When McDonald's selected a site, one of the criteria was that there would be a McDonald's at that location in perpetuity.

A purchase was always best; if a lease, there would be substantial options.

This long term mentality enhanced McDonald's portfolio and also allowed Owner/Operators to build equity.

But despite its reputation, perpetuity isn't forever. Under the new corporate management, real estate thinking might have changed. But, since everyone of the 14,000 USA locations are different, it would be difficult to identify any trends.

Is this an issue that Owner/Opertors should be discussing? 

Or is it no big deal?

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